MPs accuse councils of "over-zealous" application of EU procurement rules

Too many councils are applying EU procurement regulations over-zealously, “using them as a self-serving justification for retaining overly bureaucratic approaches”, MPs have claimed.

In a report, Local government procurement, the Communities and Local Government committee called on the Government and sector leaders including the Local Government Association to  “spell out clearly what is a proportionate approach which will both meet EU requirements and streamline processes”.

The committee also called on the LGA to ensure that pre-qualification questionnaires (PQQs) are “standardised and where possible simplified” to reduce the excessive burden on suppliers and potential suppliers of providing tailored information for multiple procurement exercises.

“Contrary to the Government’s approach, we do not support removal of PQQs entirely since they can provide a cost-effective means of pre-selecting viable tenderers,” the MPs said.

“We do not accept that in certain circumstances, particularly low cost procurement, it may be advantageous to have no PQQ but this should be left to the discretion of individual councils.”

Companies should be able to reuse a completed PQQ across the sector, the committee suggested.

The report said councils must include requirements in contracts that contractors stick to strict timetables for paying their subcontractors, right down the supply chain, with spot checks on implementation.

The CLG committee also said:

  • Some £1.8bn a year of additional savings could be made if councils improved their collaboration. The LGA should produce best practice guidance on the most effective means of joining up procurement to deliver savings.
  • Compulsorily centralising procurement operation would not only produce practical difficulties but also severely limit the flexibility of councils to deliver local objectives.
  • Councils must not let contracts solely on the basis of price, but on the basis of wider social value.
  • Councils should present an annual report to a full council meeting setting out their strategy for incorporating economic, social and environmental value in its procurement, “including the impact on local economies and small businesses”.
  • The LGA should produce guidance on how procurement can be used to deliver social value, “such as apprenticeships and trainee opportunities, and how it can better support small businesses”. 
  • As more services are put out to tender local authorities are at much greater risk of fraud. “Councils must not ‘let and forget’ contracts but should pro-actively tackle fraud throughout the lifetime of a contract, not just at the tender stage.” More should be done to encourage whistleblowers and an anonymous reporting channel should be created. 
  • The LGA should consider how to increase the transparency of commercial contracts. Local authorities should make greater use of open book accounting and consider placing similar requirements on information provision by contractors as apply to a public body.
  • Outsourcing can dilute transparency if commercial confidentiality is used as an excuse for inhibiting scrutiny of outsourced contracts. “Increasing transparency is essential if fraud is to be identified and the public is to see what value the council is getting from contracts.”
  • Recent failures of outsourcing arrangements in local and central government raised questions over whether all councils were taking adequate steps to ensure effective control of contracts being delivered by private and third sector organisations. The LGA should undertake an assessment of the level of contract and risk management skills and resources available across the sector.
  • Councils should consider when letting contracts whether they wish to take into account a bidder’s policies on employment issues, “including zero hours contracts”.
  • Councils must ensure that residents have a clear point of contact with external delivery bodies “so that they receive a seamless service, regardless of who is delivering it”. 

The committee called on local government to “step up to the mark” and get better value from the £45bn it spends each year procuring goods and services.

Clive Betts MP, chair of the CLG committee, said: “Procurement is too important to be viewed as a niche function conducted in back offices. It is central to delivering and managing the services that people rely on every day, from having their bins emptied to receiving social care. Without effective procurement local government will cease to operate.

“We need investment now so that staff right across councils gain the skills needed for effective procurement. At times staff, unsure of the needs of local residents and business—especially small local businesses—fall back on wasteful bureaucracy. This has to stop.”